How can small businesses stand up to corporate fascism?
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How can small businesses stand up to corporate fascism?
First-time small business signs a 5 yr commercial lease with an LLC in 2007 and falls behind in payments in 2008, due to slow economy. Everything earned is sent to landlords in good faith. Landlords consistently demand ‘reports’ and ‘proposals’ of how to remedy slow sales (which are provided without exception) and the insufficient sales to substantiate the increasing rent and CAM fees (that landlords refuse to explain or lower) finally leads to landlords informing business (by phone) that a broker would begin showing space to lease during business’ hours. What are small business’ rights?
Asked on June 4, 2009 under Real Estate Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 15 years ago | Contributor
If you are behind on your lease payments, you are in violation of your lease, which is a contract. When one party violates a contract, the other party is generally entitled to either ask for damages or get out of the contract or both. Therefore, the landlord can show your space to other prospective tenants, can ask you to clear out, and can if necessary seek to evict you.
As for the increasing rent and fees--did you lease allow them? If you lease allowed a certain percentage increase periodically, or for certain costs or fees the landlord has to foot to be passed on to you, then increases are allowable. However, if the lease had a set amount you had to pay, the landlord cannot unilaterally increase your costs--a contract cuts both ways. Take a look at your lease, and you are only responsible for fee increases contained therein.
You are to be commended for the transparency and good faith you showed in trying to work with your landlord, but at the end of the day, your landlord is under no obligation to let you occupy their space for less than you had agreed to pay, economy or not. If it helps, put the shoe on the other foot--suppose that you had property, and the tenant was not paying you what you thought was fair or what they had agreed to; would you allow them to stay indefinitely?
Depending on the nature of your business, it would be appropriate to ask the landlord to show the property after business hours, or at least to schedule appointments with you in advance, so as to avoid disruption of your business. However, commercial property *is* generally shown during business hours, so your landlord is under no obligation to do so.
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